Relief from VAT can be claimed in respect of VAT payable on equipment that is to be used for a qualifying purpose i.e. medical or veterinary research, training, diagnosis or treatment where the goods are wholly funded using charitable or donated funds. The relief is determined by the intended use rather than the nature of the equipment and extends to goods imported from within and outside the European Community.
To qualify for relief there are four conditions that must be met :-
1. Eligible body – as a research institute and a charity the University meets all criteria
2. Funding – equipment must be purchased using University funds. The source of funding is not important but the equipment must be invoiced to, and paid for, by the University, using funds drawn on the University bank account
3. Eligible purpose – relief is available for equipment purchased for use in undertaking medical or veterinary research, training, diagnosis or treatment.
• Medical or veterinary research means original research into human or animal disease and injury
• Medical or veterinary training covers the training of doctors, nurses, surgeons (including dental and veterinary surgeons), and other professionals involved in medical or veterinary diagnosis or treatment. The overall programme of training should include the physical application by the students of theoretical knowledge. The teaching of subjects like biology and zoology, where the trainee has no practical medical or veterinary involvement with patients, is not medical or veterinary training for the purposes of this VAT relief.
• Medical or veterinary diagnosis or treatment is the diagnosis and treatment of a physical or mental illness or injury by a medical or paramedical practitioner or a veterinary surgeon.
• Medical, scientific, computer, video, sterilising, laboratory, or refrigeration equipment purchased for any other use is not eligible for zero-rating. This includes equipment purchased or hired for:
i. general biological studies;
ii. environmental research;
iii. research into animal husbandry or food production;
iv. general administration; or
v. domestic or leisure purposes.
Where the equipment is to be used partly for a qualifying use, and partly for any other use, it can be zero-rated only where its main use is one of those detailed above. In this context ‘main’ means real, substantial and continuing.
4. Relevant Goods - Equipment is defined as articles designed or used for a specific purpose. It will usually be durable, although certain disposable items, such as syringes that are designed to be used once only, may still be equipment.
• Medical equipment is equipment that has features or characteristics that identify it as having been designed for a medical (including dental) purpose or function, such as the diagnosis or treatment of patients. This covers a wide range of goods, from simple items like bandages and tongue depressors, to complex machinery such as x-ray machines and scanners.
• Scientific equipment is equipment designed to perform a scientific function. This includes precision measuring equipment and analytical equipment such as thermometers, weighing machines and spectrometers. Equipment that is not designed to perform a scientific function, but merely works on a scientific principle, is not scientific equipment.
• Computer equipment includes computer hardware such as servers, screens, keyboards, and disks. Machinery or other equipment that is either operated by computer or has computerised components, is not computer equipment.
• Computer software is zero-rated when purchased by an eligible body solely for use in medical research, diagnosis or treatment.
• Video equipment includes video recording and playback equipment.
• Sterilising equipment includes autoclaves and other specialised equipment using steam or other high temperature processes. Microwave ovens and other cooking appliances are not sterilising equipment, even if they can be used to sterilise. Sterilising fluid is not equipment, and does not qualify for zero-rating, even when purchased by an eligible body.
• Laboratory equipment includes equipment that is designed for use in a laboratory, such as test tubes and other laboratory glassware; Bunsen burners; fume cupboards; microtomes; cryostats; laboratory benches; specialised sinks and catchpots. The following are not laboratory equipment:-
i. ordinary cupboards, lockers, seats and other furniture, even when these are used to equip a laboratory;
ii. bulk materials such as liquids, powders, sheets, pellets, granules;
iii. general purpose items used to equip a laboratory; and
iv. consumables such as chemical reagents, medicines, and cleaning and sterilising fluids.
• Refrigeration equipment includes all cooling and freezing equipment, whether designed for industrial, domestic or any other purpose.
Parts and accessories can be included within all of the above. Parts are integral components without which the equipment is incomplete. Accessories means optional extras that are not necessary for the equipment to operate in the normal course but are used to improve the operation of the equipment or enable the equipment to be used to better effect in particular circumstances.
For UK purchases, to obtain relief the supplier must be provided with a certified declaration that should be attached to the purchase order. For intra EU purchases no formal documentation is required though a clear statement of intended use should be attached to the purchase order and the invoice. For imports from outside of the EU a declaration of eligibility must be lodged with HM Revenue & Customs.
Certificates of exemption should be completed and forwarded to the Finance Office for signature. Please, remember to attach all relevant documentation.
Purchase of Medical Equipment – Purchase by an Eligible Body of Medical, Scientific etc. Equipment
Purchase of Computer Software – Purchase by an Eligible body of Computer Software for use in Medical or Veterinary Research
Importation of Medical Equipment – Importation by an Eligible Body of Scientific Equipment for Medical or Veterinary Research
If you have any queries or would like to discuss a particular situation please contact Ron Kenny by telephone on ext. 7130 or email email@example.com